﻿Is a social enterprise better than a charity? (Part 2)

In my last blog I discussed the birth and naming of the Cairo Model as a way to begin to answer the question “Is a social enterprise better than a charity?”

In this blog I will explore what the Cairo Model is and how
it can help you make appropriate decisions for legal structures, for marketing
and communication activity and funding.

So, tell me about the
Cairo Model?

The model can be summarised with this diagram (see below). The first part of the model attempts to define your market. The second part helps you understand the situation. The third part of the model suggests actions for you to take.

The market

Let’s take the three “market columns” together. The columns
are market failure, market opportunity and market appetite. These terms are
often used loosely and synonymously. The terms are related but they are
distinct.

We can define them with two criteria:

Awareness of a problem with the market

Ability or willingness of people in a market to
pay for a solution

Using these criteria we can think of a market failure, or a
social market failure, as a community of interest or geography (the market)
that has a problem, that they are unaware of.

A Market opportunity exists when the market is aware of the
problem, but they are not necessarily able or willing to pay for a solution.
This may be due to lack of money if the market is a disadvantaged community, or
it may be due to a solution not being proven as effective if this is a new
approach.

Finally, market appetite means a market is both aware of a
problem and willing to pay for a solution.

Criteria

Market Failure

Market Opportunity

Market Appetite

Awareness of the social or environmental problem

No

Yes

Yes

Ability or willingness to pay

No

No

Yes

…which suggests things you might want to consider

Once we know how developed the market is, we can extend the
model to suggest broad strategies for us to explore and implement.

If you are looking at a market failure it sensible to raise
awareness of the problem as widely as you can. This means society, the media,
in the community concerned and with policy makers. Funding is likely to come
from statutory or philanthropic sources, which suggests a charity or NGO model
suits this well.

Market opportunities are more nuanced. Awareness raising is
still a priority and more emphasis will be placed on promoting solutions to a
problem as well as raising awareness of the problem. Hopefully policy will be
changing sit is possibly less lobbying might be possible. There maybe some
early adopters in the market which means that while most of your funding is
philanthropic or from the sate there may be a growing proportion from
beneficiary customers.

Where market appetite exists, communication shifts to
marketing, branding and sales type activity. This is because people know
there’s, a problem and you have a good solution. Funding will normally be
increasing from earned income which suggests a more commercial approach is
reasonable.

Your actions

Market Failure

Market Opportunity

Market Appetite

Your marketing communication activity

Lobbying policy makers
Awareness raising of the problem in the market

Awareness raising of the problem in the market
Marketing to drive awareness of your solution

Marketing and sales activity

Funding mix: What is your financial model?

Funding comes from out of the market e.g. philanthropists, local or
central government, trust or foundations etc.

Funding primarily from out of the market
A small number of early adopters

Funding from out of the market
AND
Self-funding from beneficiaries /customers within the market

Appropriate legal structures

Philanthropic model (charity or NGO)

More commercial (social enterprise or ethical business)

The Cairo Model in its entirety!

Here’s the the whole model.

If you have any questions, or if you’d like to discuss or use this model please feel free to drop me an email.

Criteria

Market Failure

Market Opportunity

Market Appetite

Awareness of the social or environmental problem

No

Yes

Yes

Ability or willingness to pay

No

Possibly, but at a low level

Yes

Your marketing communication activity

Lobbying policy makers
Awareness raising of the problem in the market

Awareness raising of the problem in the market
Marketing to drive awareness of your solution

Marketing and sales activity

Funding mix: What is your financial model?

Funding comes from out of the market e.g. philanthropists, local or
central government, trust or foundations etc.

Funding primarily from out of the market
A small number of early adopters

Funding from out of the market
AND
Self-funding from beneficiaries /customers within the market